The Insurance Regulatory and Development Authority of India (IRDAI) intends to make it mandatory for large life insurance companies to list on the stock exchange market within a specific period. Until now, only HDFC Life has shown interest to go public, and that too, after completing 10 years of operations.
According to the IRDAI chairperson, T S Vijayan, the listing of insurers would bring about greater transparency and accountability. It would bring in the scrutiny required for efficient management of companies, he added further.
As per the IRDAI norms, to be eligible to list on the equity market, the insurer must have been operational for a minimum of 10 years in the insurance business. In an exposure draft 'Issuance of Capital by Indian Insurance Companies transacting Life Insurance Business', the regulator stated that it would give the approval based on financial performance, capital structure after offer and solvency margin of the company.
Private-sector life insurance companies with assets under management (AUMs) of more than Rs 60,000 crores will be the first ones that will have to list. ICICI Prudential Life Insurance, HDFC Life and SBI Life Insurance are at present the three largest insurance companies of India of which only HDFC Life has so far shown an inclination to list.
Earlier, the insurers were supposed to issue IPOs soon after completing 10 years in the industry, but they were not able to implement them majorly due to the poor market conditions, and low foreign direct investment cap (now been raised to 49%) among other reasons.